Experienced Restructuring/IB here, so most of my modelling is integrated DCF/cash flow given the distress nature of these businesses. I've done a few RE deals and most of the modelling is a lot simpler, simply cash flow and then an NOI, no BS aor detailed CF statement (WK, capex, revolver, etc). Do you do integrated IS/BS/CF modelling in CRE, I would think for income generating assets, such as hotels/hospitality, you would do the 3 statement model. I've done a lot of that for hospitals, which basically fall under CRE to an extent and in CCRC, but haven't seen this in office/MF/retail.
Thoughts?
I only ask this because I'm interested in transitioning to a RE investment company and am curious as to the type of modelling that's done, and ultimately if I will lose my skills in the more complicated modelling that I've been doing...
Since hotels are more of an operating business you do get into the more traditional IB analysis, especially on the luxury product.
Modeling in RE is relatively simple, the most complex modeling you'll do is for developments with pref equity and a JV structure which would consist of lots of nested if-and as well as hlookup match combos for the traditional construction/leasup cashflow and then waterfall modeling for pref and JV.
Anyways if you have IB experience the modeling should be fine. It also depends on what level you are transitioning to because in most RE projects modeling only take up probably less than 10% of my time. You spend a lot of time reading leases, loan docs, partnership docs, research reports. Then there's just the deal specific random problems that come up.
But anyways, you're modeling should be fine, on the acquisitions side you don't do an incredible amount of modeling over the course of a deal. Although since you are normally running a couple projects at once you end up modeling a little every day and all day some days.
As for you last question...I don't think the skill of playing with excel is something you can really lose...
Take it for what you will from a stranger on the internet but the firm I work for owns two luxury hotels in NYC, one in Jersey City, ground leases under 1000 more rooms, and we underwrite at least one a quarter in major markets as a potential acquisitions, which is more than just looking at the OM. The hotels are unlike any other asset you would underwrite and the modeling and due diligence you do is much more like underwriting an operating company, although it is a hotel so it has its own unique set of challenges/underwriting criteria.
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